Sunday, January 10, 2010

Will ObamaCare Kill The HSA?

Brian Schwartz at alerts us to this recent analysis on whether ObamaCare will kill the HSA (Health Savings Account).

From Roy Ramthun's piece, "Status of HSAs and Consumer-Driven Health Care in Health Reform":
...[T]he changes proposed to all health insurance policies could have potentially adverse affects on high deductible health plans (HDHPs) that currently make people eligible to contribute to HSAs. Some of the impact may not be known until regulations implementing the final provisions are written.

...Another new requirement for all insurance policies is that they provide a minimum actuarial value for the benefits covered.

Under the House bill, the minimum actuarial value must be at least 70 percent. Under the Senate bill, the minimum actuarial value must be at least 60 percent. Given the higher deductibles that most HDHPs have (compared to traditional HMO and PPO plans), the lower minimum actuarial value requirement in the Senate bill would make it easier for more HDHPs to meet the standard.

...It is also not clear whether a plan's actuarial value would include employer or individual contributions made to the individual's HSA.

The House bill is completely silent on this matter which would leave it up to the Secretary of HHS to define in regulations. The Senate bill requires the Secretary of HHS to issue regulations on this matter.

Including the contributions in the calculation of a plans actuarial value would make it easier for more HDHPs to meet the minimum actuarial value requirement. If contributions are not included, HDHPs, many of which have actuarial values below 60 percent (or whatever the final standard becomes) based on the insurance coverage alone, could no longer be sold.
(I highly recommend reading the full text of "Status of HSAs and Consumer-Driven Health Care in Health Reform" for additional details of the proposed new regulations.)

In essence, the Secretary of Health will have the discretion to determine whether you are allowed to use a Health Savings Account to take care of your insurance needs. Instead of a "rule of law", we'll have "rule by men" with enormous latitude to decide whether you can spend your own money as you see fit to protect your own life and health.

Given the increasing popularity of HSA's, these new laws could affect millions of Americans

This is just an application of the basic principle that we've already seen in Massachusetts. When government makes health insurance mandatory, the government must also necessarily determine what constitutes an "acceptable" policy. This means depriving individuals of the ability to choose plans (such as HSA's) that they might consider in their best interest. Instead, government will force Americans to spend their money as the government sees fit.